Column: How the left uses corporate America to evade democracy
Time was, CEOs of mighty enterprises shied away from politics, especially hot-button social and cultural issues. They focused instead on the bottom line. They maximized shareholder value by delivering goods and services to customers. Some businessmen still operate by this principle. In doing so they provide not only for their employees and CEOs and board members but also for the institutions—pensions, individual retirement plans, index funds, hospitals, philanthropies—invested in their companies.
That is no longer enough for many of America’s richest and most powerful. Suddenly, corporate America has a conscience. Every week brings new examples of CEOs intervening in political, cultural, and social debate. In every instance, the prominent spokesmen for American business situate themselves comfortably on the left side of the political spectrum. Shareholder capitalism finds itself under attack. Not just from socialism but also from woke capitalism.
These outbursts are not just virtue signaling. Nor is the left-wing tilt of corporate America merely a response to the “rising American electorate” of Millennial, Gen Z, and minority consumers. What is taking place is not a business story but a political one. What is known as “stakeholder capitalism” is another means by which elites circumvent democratic accountability.
Corporate managers find themselves at odds with at least 46 percent of the electorate. The divergence is not over jobs or products. It is over values. The global economy generates social inequalities as much as economic ones. Many of the winners of the global economy justify their gains by adopting the rhetoric, tastes, ideas, and affiliations of their cultural milieu. Their environment is inescapably center left.
Even so, the social justice agenda of corporate America is not only meant to appease voters, or even to placate Elizabeth Warren. Some of these businessmen really believe what they are saying. And they are beginning to understand that they have another way—through social position and market share—to impose their cultural priorities on a disagreeable public.
The trend began as a response to the Tea Party. In 2010 the “Patriotic Millionaires” began advocating for higher marginal tax rates. A few years later, when state legislatures passed laws opposed by pro-choice and LGBT groups, corporations threatened or waged economic boycotts. Large individual donations made up more than half of Hillary Clinton’s fundraising; for Donald Trump the number was 14 percent.
CEOs protested the implementation of President Trump’s travel ban in 2017. The following year, after two black men were arrested at a Philadelphia Starbucks, Howard Schultz closed stores nationwide so his more than 175,000 employees could be trained in diversity, equity, and inclusion. Earlier this summer, Nike pulled shoes featuring the Betsy Ross flag after Colin Kaepernick raised objections. Recently four major auto companies struck a deal with the state of California to preserve fuel economy standards the Trump administration opposes.
Business has provided ideological justification for its activities. In mid-August, a group of 181 members of the Business Roundtable, including the CEOs of Morgan Stanley, GM, Apple, and Amazon, issued a statement redefining the purpose of a corporation. “Generating long-term value for shareholders” is necessary but insufficient. In the words of Jamie Dimon, business must “push for an economy that serves all Americans.” A few weeks later, one of the Business Roundtable signatories, Walmart CEO Doug McMillon, announced that America’s largest retailer would end sales of ammunition for handguns and for some rifles. Once its current inventory is exhausted, of course.
“We encourage our nation’s leaders to move forward and strengthen background checks and to remove weapons from those who have been determined to pose an imminent danger,” McMillon wrote. “We do not sell military-style rifles, and we believe the reauthorization of the Assault Weapons ban should be debated to determine its effectiveness.” Note the use of the first-person plural. Of Walmart’s 1.5 million employees, more than a few, one assumes, do not believe it is necessary to “strengthen background checks” or debate “the Assault Weapons ban.”
To whom does the “we” in McMillon’s statement refer? To everyone who thinks like he does.
“You have a business acting in a more enlightened and more agile way than government,” is how one MSNBC contributor enthusiastically describedWalmart’s directive. Left unsaid is why government has not, in this case, been “enlightened” or “agile.” The reason is constitutional democracy. The electorate, like it or not, continues to put into office representatives opposed to gun registration and to a renewal of the Assault Weapons ban. And these representatives, in turn, have confirmed judges who believe the Second Amendment is just as important to self-government as the First and Fourteenth.
Much of Western politics for the last decade has involved elites figuring out new ways to ignore or thwart the voting public. Barack Obama was following in the EU’s footsteps when he went ahead with Obamacare despite Scott Brown’s victory in Massachusetts in January 2010, and when he expanded his DACA program to the parents of illegal immigrants brought here as children despite Republican gains in the 2014 election and despite his own admission that he lacked authority.
James Comey’s towering ego and self-regard compelled him to interfere in the 2016 election with consequences we can only begin to reckon. Over the last two-and-a-half years, district judges and anonymous bureaucrats have impeded and obstructed the agenda of a duly elected chief executive. A few weeks ago a former governor of the Federal Reserve suggested in Bloomberg that the central bank should thwart Trump’s reelection. And in England, elite resistance to the results of the 2016 Brexit referendum and to the 2017 parliamentary invocation of Article 50 has brought the government into a crisis from which there seems no escape.
In such an environment, one begins to see the appeal of nongovernmental instruments of power. What might be rejected at the ballot box can be achieved through “nudging” in the market and in the third sector. If you can’t enact national gun control through Congress, why not leverage the economic and cultural weight of America’s largest corporations? The market, we are told, is not a democracy.
Oh, but it is. The market may be the ultimate democracy. “The picture of the prettiest girl that ever lived,” wrote Joseph Schumpeter, “will in the long run prove powerless to maintain the sales of a bad cigarette.” Woke capitalists remain accountable to consumers and to shareholders. The audiences of ESPN and of the NFL cratered when those institutions elevated politics over consumer demand. Hollywood’s anti-American offerings routinely flop. Public opinion, in the form of popular taste, rules. Shareholders of publicly traded companies are a type of electorate. The companies that do not satisfy customers will disappear. Or shareholders will demand changes to management to prevent such an outcome.
The politicization of firms is a double-edged sword. The responsible stakeholder CEOs may have the best of intentions. They might assume they are doing the right things not only by their companies but also by their societies. What they fail to understand is that corporations acting as surrogates of one element of society, or of one political party, will not be treated as neutral by other elements, by the other party. By believing their superior attitudes will save capitalism, our right-thinking elites are undermining its very legitimacy, and increasing the severity of the ongoing populist revolt.
His flip-flops suggest that he remains troublingly clueless about the biggest geo-political peer rival and potential challenger to the United States.
Under old-school journalism, reporters would be camping in front of Joe Biden’s campaign offices asking questions on his foreign policy: whether he still thinks Qatari-funded jihadis wanted to topple Syria’s Bashar Assad, if Libya intervention under President Obama was a mistake, and the reason for the flop of Obama’s Asia Pivot. In the last few weeks, Joe Biden has shown he would say anything to be president, including first promising to cure cancer, then flip-flopping on abortion, and finally flipping on China.
American domestic politics are for Americans to decide when the election comes, but at a time Beijing is returning to Tiananmen form, no bigger issue needs further scrutiny than Biden’s China stance.
Biden recently said in Iowa that China is a “serious challenge” and threat, adding, “We are in a competition with China. We need to get tough with China. They are a serious challenge to us and in some areas a real threat.”
Funny, because in May, he mocked the China threat, saying, “China is going to eat our lunch? Come on, man…They can’t even figure out how to deal with the fact that they have this great division between the China Sea and the mountains in the east, I mean in the west.”
Biden then added that he is worried about President Trump’s tariff wars against China, which is arguably “exacerbating the challenge,” and said “if we do what we need to do here at home…we can out-compete anyone.” According to reports, Biden then said: “You bet I’m worried about China…if we keep following Trump’s path.”
While pondering the alternative way, Biden said he would force China to go green: “Biden will rally a united front of nations to hold China accountable to high environmental standards in its Belt and Road Initiative infrastructure projects so that China can’t outsource pollution to other countries.” Yes, good luck with that. It might sound plausible in a school kid’s Earth Day project, but not in the policy plans of the prospective leader of the free world.
This, is, of course, pure madness. There is no bigger potential challenge for the West, and especially for the United States, than the rise of a near peer-rival great power like China. At this very moment, Chinese government lackeys in Hong Kong are cracking down on the largest protests of 2019, where more than a million Hong Kongers are marching to stop China’s de facto takeover of Hong Kong’s justice system, which would allow any dissident to be packed off to trial in mainland China.
But that is not the biggest issue. The problem is China is a challenge unprecedented to U.S. policymakers. Chinese peacetime gross domestic product is overtaking America’s, and China is set to soon, as a percentage of relative power, eclipse all previous great power challenges that the United States has ever faced, including Imperial Spain, Imperial Germany, Nazi Germany, Imperial Japan, and even the Soviet Union.
To put it simply, the conflict of interest between the rising China and an established hegemon in the United States is inevitable. In international relations, it is known as “the Thucydides Trap“.
Consider the world of international politics like a snooker table. Unlike the domestic politics of a nation state, the international system is anarchic in nature. That is because, in domestic politics there is an established government that can decide and, if needed, enforce. The lack of hierarchy in international politics makes it anarchical, in Kenneth Waltz’s terminology, because there is no global governance, and any attempt to form a global empire would invite backlash from rival powers, while any attempt at global governance would result in a global war.
Naturally, international politics is determined by nation-states, and more importantly great powers, which are the single most important actors of world politics. And great powers rise or fall due to a variety of factors: stupid policies, ideological and military overstretch, spending more than one can afford, foolish wars and global policing, failure or decline in technological competition, juvenile or effeminate elites, and the biggest variable of all: time.
In that light, the Thucydides Trap comes in.
Throughout history, there has been one completely consistent pattern: Growing and rising powers always challenge established powers. From Athens and Sparta, to Rome and Carthage, to Napoleon, to the two World Wars, and the Cold War, this pattern remained the same. China and the United States are just the new avatars of this great game, as the actors change, but the game remains the same.
In this context, conflict does not always mean war. It could be a cold war, trade war, proxy wars, anything, but conflict between a rising and established power is inevitable. As J.J. Mearsheimer states in his book, China will try and push away the United States from Asia, just as the United States once pushed away European great powers from the Western Hemisphere.
Meanwhile, Biden is flip-flopping on this biggest challenge confronting the United States, tweeting friendship bands about how much he misses Barack Obama, and claiming there was not a hint of scandal during his eight years as vice president. For all his problems, President Trump has been forthright about the China challenge, much more than any current Democrat, or even a majority of the Republican leaders. In the future, this might be considered his legacy.
While most focus on tariffs and economics, China—with its AI research, space research, naval build-up, data and IP theft, and unfair trade practices—is a much bigger challenge than to suffer a dollar increase in the price of a beer can. There are questions already on how one should contain China, or what in itself is an intelligent containment strategy.
Some are pointing out their doubts about whether the present U.S. leadership and population is even martial enough to withstand the long-coming generational conflict. But whatever the case, to lightly rephrase an old and used proverb, you cannot choose whether to be interested in a coming Cold War, as the Cold War is already interested in you.
Biden’s callousness about identifying that and then his face-saving flip-flop is, therefore, the most troubling aspect of his candidacy. The less said about his Democratic colleagues, the better.
Something feels off in the timing of our debate over the economy. A loss of faith in free markets, among intellectuals and the public alike, was only natural in the 1930s. But today? Intellectuals on the left and the right are more convinced than ever that our economic policies are deeply misguided, at the same moment that unemployment rates and wage growth are the best they have been in decades. When Americans answer polls, they express less and less confidence in free-market capitalism — even as they express more and more satisfaction about economic conditions.
Perhaps people are evaluating these questions against different time horizons. They may, that is, think that the economy is performing well at the moment but has become less capable of delivering broad-based prosperity over the course of a generation. If today’s conditions persist long enough, then, the reputation of capitalism may recover.
Timing is relevant to our evaluation in another way. If our economy has gotten worse at generating sustained prosperity, worse enough to make a loss of faith in capitalism understandable if not justified, then it matters when this decline began.
In 2015, during the last presidential campaign, Hillary Clinton suggested that “for decades” the economy had been offering a worse deal for most people. Her explanation: “For 35 years, Republicans have argued that if we give more wealth to those at the top — by cutting their taxes and letting big corporations write their own rules — it will trickle down. It will trickle down to everyone else.” The election of Ronald Reagan, in other words, was the turning point. It followed that many of his policies should be reversed: The top tax rates should go back up and unions should be strengthened.
If economic conditions have been deteriorating for an even longer period, however, then merely reversing Reaganomics might not be enough. And it is common to run into claims, apparently backed by data, that suggest as much. The Pew Research Center notes that the average wage, adjusted for inflation, fell between 1973 and 2018. It had risen steeply from 1964 (when the data series began) through 1973. Then it dropped for roughly two decades, and over the next two recovered but did not get back to its peak.
If real wages have truly been stagnant for longer than most Americans have been alive, then the economy has not worked in anything resembling the fashion we expect. Economic growth has been mostly an illusion: We have more stuff only because more of us work, large numbers of women having joined the paid labor force. If this picture is accurate, we need to make radical changes either to the economy or to our expectations of ever-rising prosperity.
There are, however, two big reasons to doubt the stagnation thesis. The first is that non-wage benefits have become a larger and larger element of compensation. Perhaps they have become too large an element: The tax code encourages employees to get health insurance through their companies rather than take higher wages and buy coverage themselves, and there are reasons to think we would be better-off if the tax code did not do that. But non-wage benefits have economic value to employees, and so looking at wages alone will cause us to underestimate employees’ material welfare.
The second reason for doubt is that a common method of adjusting for inflation — the one used in the Pew numbers cited above — overdoes it. The center-right social scientist Scott Winship has been indefatigable in explaining why using the Consumer Price Index (specifically a measure called “CPI-U”) as the gauge of inflation is a mistake, and how it warps our understanding of economic trends. It overestimates housing inflation before 1983, and ignores how consumer behavior responds when prices change.
Since inflation compounds, small errors each year add up to major changes over decades. Use a better measure of inflation, one based on personal-consumption expenditures, and the average wage rose by 21 percent from 1973 to 2018. (Average compensation must have risen more.)
The data on median family income also show a reassuring amount of growth. The family in the middle of the pack in 2015 made 45 percent more, with the right inflation adjustment, than its counterpart in 1970.
But the same numbers may also explain some of the public’s dissatisfaction with the economy. Median family income grew by a spectacular 58 percent in the 15 years from 1955 to 1970, then grew another 11 percent from 1970 to 1985, and 24 percent from 1985 to 2000. But the median family income of 2014 was slightly lower than it was in 2000.
What happened is that after the turn of the millennium we went through an extended period of slow growth punctuated by one mild and one severe recession. Median family income dropped more than 7 percent from 2007 through 2011, the sharpest decline since this data series started in 1953. It did not recover completely until 2015.
We have had a few good years since then. But it is not surprising that during the last two decades many Americans came to feel that their economic circumstances were stagnant and insecure. It is not surprising, either, that many of them have the sense that things used to be better — or that a generation of young people who started their work lives in a slow-growth economy tend not to have positive attitudes toward capitalism.
Instead of five decades of economic stagnation, we have had two decades of weak growth. That record does not suggest that the pro-market policies of the 1980s and 1990s were fundamentally mistaken. It suggests, rather, that we have discrete problems that deserve to be tackled.
High on the list of needed changes should be a reform of our monetary regime. It failed badly over the last dozen years. In 2008, excessive fear of inflation led the Federal Reserve to signal that it was going to tighten monetary policy even as the economy was sinking into a recession. It kept monetary conditions too tight after the crisis hit, too, for example by encouraging banks to hold additional reserves. These policies made the recession more severe and the recovery weaker. That these failures are not more widely appreciated is symptomatic of the misguided thinking that continues to govern monetary policy.7
Reforms should be undertaken in other areas, too. Our higher-education system is not working for most young people. Our immense health sector includes immense inefficiency. Regions of the country with high economic growth have imposed regulations that make it prohibitively expensive for less fortunately situated Americans to move there.
So we are called to be ambitious, but not revolutionary. Capitalism does not need to be overthrown or even rethought. Rather, the principles that make markets work need to be applied to some areas where they have not been present. Our economic system does not need dismantling. But it does
While the media-driven scandals du jour roll on, President Trump quietly goes about reshaping the U.S. economy. Case in point: Last week, Trump directed the EPA to cut even more red tape for manufacturers. And he’s not done yet.
The idea is not to get rid of air quality standards, but to make sure that the science behind them is transparent and reliable — and not just part of someone’s political agenda, as has often been the case in the past.
The White House says that U.S. National Ambient Air Quality Standards constitute “outdated and unnecessary barriers to growth.” Under the new standards, EPA will process state-submitted plans within 18 months, for instance, giving regulated industries a clearer idea of what they can and can’t do, quickly. And the permitting process for individual projects will eventually be limited to a year. Continue reading
By Eric Peterson • The Federalist
Last month, when President Obama’s Department of Labor released its long-awaited “overtime rule,” the mainstream media headlines were predictable: “Obama administration announces final overtime rule boosting pay for millions,” said the Los Angeles Times. “New overtime rules a boon for middle class workers,” added Newsweek. With claims from the Obama camp that the new mandate will boost pay by $12 billion over the next decade, the majority of the coverage has been overwhelmingly positive.
But here are a few headlines we might have seen if media outlets made an honest assessment of the rule: “Overtime rule to cause more than 4,000 cleft lip surgeries to not be performed for children in need”; “At-risk youth could see fewer programs because of costly DOL rule”; “Domestic abuse nonprofit faces cuts because of Obama’s overtime rule.”
Those may not have been headlines atop major newspapers, but they are real concerns nonprofit organizations submitted to the Department of Labor while the overtime rule was undergoing consideration over the past year. Continue reading
America’s declining score in the index is closely related to rapidly rising government spending, subsidies, and bailouts.
by Anthony B. Kim • Daily Signal
According to the 2016 Index of Economic Freedom, an annual publication by The Heritage Foundation, America’s economic freedom has tumbled. With losses of economic freedom in eight of the past nine years, the U.S. has tied its worst score ever, wiping out a decade of progress.
The U.S. has fallen from the 6th freest economy in the world, when President Barack Obama took office, to 11th place in 2016. America’s declining score in the index is closely related to rapidly rising government spending, subsidies, and bailouts. Continue reading
By PAUL BEDARD • Washington Examiner
The Fraser Institute’s annual report, Economic Freedom of the World, showed that the country’s drop started in 2010, the second year of the Obama administration.
The world-recognized report showed that the U.S. fell in several areas, including legal and property rights and regulation. Continue reading
2016: Presidential candidates, both announced and prospective, used Labor Day to fire off some pretty harsh criticisms of President Obama’s economy. That’s not news. What is news is who was doing the firing.
Just listen to some of the heated rhetoric about the results that seven long years of Obamanomics have produced:
“I am hot. I am mad, I am angry.”
“There is something profoundly wrong when … the average American is working longer hours for lower wages and we have shamefully the highest rate of child poverty of any major country on earth.” Continue reading
by Allan Sloan • The Washington Post
You can’t keep a bad idea down. That’s my reaction to a terrible proposal in President Obama’s budget — limiting how much money can be set aside on your behalf in 401(k)s, pensions and other tax-favored retirement accounts.
The idea, of course, is to limit retirement-related tax breaks for “the rich.” The Treasury wants to limit the value of pensions and retirement accounts to about $3.4 million for a married couple, and something less than that (it doesn’t say how much) for single people. Continue reading
by Ali Meyer • cnsnews.com
The United States does not rank among the Top 10 countries in the world for economic freedom, according to the Heritage Foundation’s 2015 Index of Economic Freedom.
Instead, the U..S. ranked only 12th–after Hong Kong, Singapore, New Zealand, Australia, Switzerland, Canada, Chile, Estonia, Ireland, Mauritius, and Denmark.
Estonia was formerly a part of the Soviet Union.
The Index rates economic freedom for countries on 10 quantitative and qualitative factors that are based on four pillars of freedom: rule of law, limited government, regulatory efficiency and open markets. Continue reading
Of my company’s 5,453 eligible employees, only 420 actually enrolled. The other 5,033 opted to pay a penalty.
by Andy Puzder • The Wall Street Journal
Among the Affordable Care Act’s many economic and political disruptions, the law has unintentionally encouraged employers to convert full-time jobs into part-time jobs. ObamaCare mandates that employers offer health insurance to employees who work more than 30 hours a week, or pay a penalty up to $3,000 an employee. But employers have no such obligation for employees who work less than 30 hours a week, making part-time employment less costly.
It’s a simple fact: Make something more expensive and people will use less of it; make something less expensive and they will use more of it. So naturally employee hours have been reduced, particularly in the retail segment, which has lowered wages and reduced consumer spending. Continue reading
by Stephen Moore • The Washington Post
It was 40 years ago this month that two of President Gerald Ford’s top White House advisers, Dick Cheney and Don Rumsfeld, gathered for a steak dinner at the Two Continents restaurant in Washington with Wall Street Journal editorial writer Jude Wanniski and Arthur Laffer, former chief economist at the Office of Management and Budget. The United States was in the grip of a gut-wrenching recession, and Laffer lectured to his dinner companions that the federal government’s 70 percent marginal tax rates were an economic toll booth slowing growth to a crawl.
To punctuate his point, he grabbed a pen and a cloth cocktail napkin and drew a chart showing that when tax rates get too high, they penalize work and investment and can actually lead to revenue losses for the government. Four years later, that napkin became immortalized as “the Laffer Curve” in an article Wanniski wrote for the Public Interest magazine. (Wanniski would later grouse only half-jokingly that he should have called it the Wanniski Curve.) Continue reading
Shadowy donor club to shield donor names, internal deliberations from public view
by Lachlan Markay • Washington Free Beacon
The Democracy Alliance says opacity in political funding and the influence of “big money” is corrosive to the democratic process, but the group currently discloses nothing about the hundreds of millions of dollars it steers to leading liberal and Democratic organizations. Continue reading
by Sabrina L. Schaeffer • Forbes
It finally arrived – the letter from my health insurance company announcing that my family will be moved to a new plan beginning January 1, that “meets all of the requirements of the Affordable Care Act” . . . for a mere $500 more a month.
I knew this was coming. Golden Rule has been sending me “warning” letters for months now. But really I’ve known this was coming for much longer – ever since Congress created the government-run, one-size-fits-all system known as ObamaCare. And I’ve watched as millions of others – like those on MyCancellation.com – have gone through the same ordeal of losing plans they liked and could afford. Continue reading
The goal must be to find ways for liberty and the environment to flourish together, not to sacrifice one in the vain hope of protecting the other.
by Ronald Bailey • Reason.com
Human activity is remaking the face of the Earth: transforming and polluting the landscape, warming the atmosphere and oceans, and causing species to go extinct. The orthodox view among ecologists is that human liberty—more specifically economic activity and free markets—is to blame. For example, the prominent biologist-activists Paul and Anne Ehrlich of Stanford University recently argued in a British science journal that the environmental problems we face are driven by “overpopulation, overconsumption of natural resources and the use of unnecessarily environmentally damaging technologies and socio-economic-political arrangements to service Homo sapiens’ aggregate consumption.” The Ehrlichs urge the “reduction of the worship of ‘free’ markets that infests the discipline” of economics. Continue reading